Chief supply chain officers need to accelerate their teams’ skills and capabilities if they are to meet growing expectations about the business value the function can deliver, according to the latest annual study conducted by SCM World and published today.

Along with its traditional role of delivering products to customers while containing or reducing operating costs, supply chain in many companies is now also charged with harnessing innovation from suppliers, facilitating growth in new markets and building new fulfillment channels. It has also assumed accountability for supply chain risks and the impact of sourcing and manufacturing operations on the environment and local communities.

Kevin O’Marah, Chief Content Officer, SCM World told SCMR in an exclusive interview that supply chain executives are less confident than they were in 2012 about the standing of their functions.

“But that may also be because so much is now being expected of them,” he added. “With all the omni-channel changes, there’s a great deal of pressure being put on managers.”

He also noted that supply chain needs to catch up to the bigger role we have claimed for ourselves in recent years.

“Unfortunately, we still seem to struggle with developing the skill sets required among our teams. Too little systematic talent development and too hazy a measurement system may be confounding our efforts and investments at exactly the time they are needed most.”

The global survey of more than 750 executives found that supply chain leaders currently face five major pressure points:

1. Continue to reduce costs while simultaneously improving customer service and supporting expansion in new markets and product lines
• 68% of respondents say that operating cost reduction is “very important” as a supply chain contribution to business strategy – up from 64% in 2012.
• 83% believe that supply chain excellence contributes high or very high value in terms of enhancing customer service and loyalty; while almost three-quarters say the same about business expansion and new product introduction.

2. Manage the complexity of omnichannel selling and customer fulfilment
• 55% report that the demands of e-commerce and mobile-enabled consumers are increasing the number of SKUs they have to support.
• 54% are building new distribution centres (of both the larger, more centralised and smaller, more local variety); and 48% are building direct-to-customer fulfillment capabilities.

3. Deliver top- and bottom-line value, not just compliance, from sustainability initiatives
• 47% say their boards expect lower costs and greater efficiency – up from 43% in 2012 and just 32% in 2011.
• 24% say higher sales revenue is a business driver – up from 17% last year.

4. Mitigate the risk of product integrity issues – and do so across all supply tiers
• In the wake of the horsemeat scandal in Europe, safety and quality incidents top the risk index – 37% are “very concerned” about this for 2013-14 and 35% are “concerned.”
• Just 13% say they have visibility of potential risks at the third tier of their supply base (their supplier’s supplier’s supplier); while 41% are limited to the tier-one level.

5. Facilitate career progression, new product introduction skills and demonstrate ROI
• 76% report that providing compelling career options for talented supply chain staff is challenging – up from 66% in each of the previous two years.
• 53% believe that new product introduction and launch capabilities are now “essential” for supply chain – up from just 18% in 2011.
• 53% of respondents overall – and 31% of those spending 5% or more of their fully loaded personnel costs on training and development – say they don’t track return on investment.

This is the fourth annual Chief Supply Chain Officer Report published by SCM World. In total, 756 completed surveys were received from members of SCM World’s global community and other supply chain, procurement and operations practitioners between the end of July and early September 2013. Respondents are drawn from a wide range of industry sectors, including hi tech, food & beverages, consumer packaged goods, industrial and healthcare & pharmaceutical; while 44% are based in the Americas, 41% in EMEA and 15% in Asia-Pacific and rest of the world.

About the Author

Patrick Burnson, Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

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